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Protecting yourself against mental illness disability: Lump sum vs income protection benefit

09 October 2018Old Mutual

With World Mental Health Awareness day on 10 October, the increasingly common occurrence of deaths related to mental illness – not only locally but on a global scale – means that the topic of depression, also called the disease of loneliness, remains high on news agendas.

Often depression, along with other mental illnesses, is swept under the rug or ‘ignored’ because of the stigma attached to it. But, as it becomes more widespread and talked about it becomes harder to ignore its impact – not only on holistic wellbeing but on one’s ability to earn an income.

The cold fact is that depression is now believed to be the number one cause of disability today.

Locally, figures show that psychiatric disorders – such as depression and anxiety – are on the increase for disability claims, accounting for 7% of the average pay-out ratio for Old Mutual’s 2017 GREENLIGHT cover compared to 6% in 2016.

“Mental illnesses are impacting people’s ability to function in their jobs to the point where they are unable to work,” says Kerissa Naidoo, Senior Medical Officer at Old Mutual. Naidoo says that due to the stigma associated with mental illness, people tend to internalize their difficulties and suffer in silence, rather than seek help. “The longer the suffering, the more adverse the effects.”

Disability cover should be considered as part of a holistic financial plan as it can provide peace of mind that you will be covered should you become unable to work as a result of a mental illness. “But there are factors about the different products available that you should consider,” says Naidoo.

When analysing the figures, Naidoo says that in 2017 Old Mutual paid out 96% of all disability income claims. “A disability claim is more likely to be approved on the income benefit simply because on lump sum the insurer would need to establish that your disability is permanent before you can claim. On income, you will be paid from the point you are deemed unable to work as a result of your condition, whilst permanence is still being assessed,” explains Naidoo.

She adds that 44% of approved claims for depression fell under the Disability Lump Sum benefit, which means that the condition had become permanent, whereas 56% of approved claims, fell under the Disability Income benefit.

“By coupling disability income protection with lump sum cover, it gives customers peace of mind that, if needed, their financial needs will be taken care of allowing them the time and means to get the treatment they need. The income benefit replaces or supplements the customer’s income due to the loss of earning ability – be it temporarily or permanently. This may help to prevent mental illness from manifesting into something more serious and adversely affecting the person’s life even further.”

“We need to shift perceptions around mental illness as it becomes more widespread”, she says. “It is increasing amongst customers across the spectrum, for instance, in 2017, our youngest claimant for depression was 29 years old, and our oldest was 60.”

She says that while some may link poor socio-economic conditions and unemployment to mental illness, especially depression, the reality is that anyone can be affected. According to South African Depression and Anxiety Group (SADAG) around 30% of South African adults will have suffered from some form of mental disorder in their lifetime.

“There’s no denying South Africans are stressed about covering monthly bills or retaining their jobs, but this doesn’t mean that high-income earners do not suffer from mental illness.” says Naidoo.

“Research shows that those with job authority at senior level, such as CEO’s and CFO’s, may actually be twice as likely to suffer from depression due to the extreme pressure or even loneliness.”

“No one can predict the future or what adverse life events could affect your well-being – be it emotionally or physically, but you can plan for it. What is important is that you take charge of your own peace of mind today. October is Mental Health Awareness Month, take the time to speak to an accredited financial adviser to make sure you have the right plan in place to ensure your income, nest egg and holistic wellbeing is safeguarded,” concludes Naidoo.

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